Thank you for the opportunity to appear
before this distinguished body to discuss the H-1B and L-1 professional
guestworker programs and their effect on employment opportunities for current
and future workers in certain key employment sectors. While the federal
government is ultimately responsible for formulating visa policy, the effects
are felt keenly at the local level. It is local government that must contend
with the economic and labor market impact of these programs, and local officials
have a duty to let federal officials know how federal policies affect the lives
of individuals in their jurisdiction.

Our research has shown that continued heavy
reliance on the H-1B and L-1 guestworker programs by employers in certain
sectors – especially information technology, but also higher education, nursing,
teaching, and other professional jobs – diminishes opportunities for U.S.
workers in those fields, and may be discouraging young people from considering
some of those careers. In some of the job sectors where guestworkers are
prevalent, such as information technology and higher education, the availability
of guestworkers means that employers have little incentive to improve
compensation or boost representation of women, blacks, and Hispanics, who are
already noticeably less numerous in those occupations.

Background

H-1B (Specialty workers)

The professional guestworker program known
as H-1B was established to give U.S. companies access to foreign talent on a
temporary basis as a supplement to the U.S. workforce and to provide a means for
companies to attract uniquely skilled or qualified workers. It was sold to
Congress and the public as a way to alleviate shortages of workers in certain
sectors. The visas are good for a period of up to three years, with possible
renewal for a second three-year period.

However, the law does not require the
employer/sponsor to demonstrate that there is a shortage of U.S. workers for
that job, or that it tried and failed to find a qualified U.S. worker. Many
openings are never advertised or offered to U.S. workers. Even more startling,
as documented by the advocacy group Bright Future Jobs, some companies are
openly conducting H-1B-only recruiting campaigns -- literally advertising that
“U.S. citizens and legal immigrant workers need not apply.” The Labor
Department maintains that this practice is legal.

H-1B workers must have and must be filling
a job that requires at least a bachelor’s degree or the equivalent experience.
However, they need not demonstrate any special expertise nor fill any exotic
need. In fact, more than half of the jobs filled by H-1B workers in 2005 were
classified as “entry level” or “trainee” by the employer on the application.
Though they are often described by industry representatives as the “best and the
brightest,” in fact, most H-1B workers are relatively young. Since sixty-five
percent are aged 25-34, few of them realistically can be considered to have
demonstrated exceptional professional accomplishment. Forty-five percent have
no more than a bachelor’s degree, while only five percent have a doctorate.
The median salary offered is $55,000 per year. (See “Characteristics of
Specialty Occupation Workers (H-1B): Fiscal Year 2005,” Department of Homeland
Security,
http://www.dhs.gov/ximgtn/statistics/.) Positions for which Chicago-area
employers recently sought H-1B workers include such ordinary job titles as
Account Executive, Client Service Associate, Copywriter, Financial Services
Sales Representative, Loan Officer, and so on. No one can credibly claim that
these are jobs Americans can’t or won’t do.

The law does require companies to promise
that they will pay the guestworker what is known as the “prevailing wage” – a
salary that is supposed to be comparable to what a U.S. worker would earn. This
regulation is intended to discourage employers from hiring guestworkers at lower
salaries.

Yet these regulations have proven to be
ineffective. Department of Labor data show that employers are offering to pay
H-1B workers an average of $16,000 less per year than U.S. computer workers in
the same location and job. (See “Low Salaries for Low Skills: Wages and Skill
Levels for H-1B Computer Workers, 2005,” by John Miano, Center for Immigration
Studies,
http://www.cis.org/articles/2007/back407.html.)

Employers need only promise on their
application that they will pay the prevailing wage and that the workers they
sponsor are not replacing laid off U.S. workers. No one is checking up on these
claims. The Department of Labor has no authority to investigate applications,
unless they receive a complaint from a worker. They do not check to see if the
business really exists, if the job opening exists, or if the salary offered is
actually paid. The process is automated; as long as the employer signs the form
and includes a check, the application is approved.

One regulatory mechanism that does help to
control use of the program is the statutory cap on the number of visas that can
be issued to guestworkers sponsored by private companies. The cap is now set at
65,000 per year. Employers that are institutions of higher education,
non-profits or government research organizations are exempt from the cap. Visas
sponsored by those employers make up 44 percent of the total. In addition, a
recent amendment to the law provides for an additional 20,000 visas each year
for graduates of U.S. master’s and Ph.D. degree programs, effectively providing
that many more visas to private employers subject to the cap. The total number
of applications approved for 2005 (the most recent year for which statistics are
available) was nearly 117,000.

L-1 Visas (Intracompany Transferees)

The L-1 visa was created to allow
multinational companies to transfer key executives and managers from overseas
offices to the United States for a temporary assignment. As usage of the H-1B
visa grew in the late 1990s, putting pressure on the cap, employers began to use
the L-1 visa as an alternative vehicle for guestworkers. Technology services
companies commonly “transferred” employees from overseas to sites in the United
States to perform routine work at the client’s job site. Some U.S. companies
replaced entire back office operations staffed by U.S. workers with contractors
holding L-1 visas who were employed by service providers to work on the client’s
premises.

The L-1 visa program has no cap on
issuances, no prevailing wage requirement, and no attestation as to working
conditions or related layoffs. Recent reforms have prohibited the practice of
sponsoring contractors to perform routine work at the client’s location.

Statistics

116,927 total H-1B applications were
approved in 2005.

18,000 H-1B workers were admitted to
Illinois in 2006 (not an exact proxy for individuals).

13,385 L-1 workers were admitted to
Illinois in 2006 (not an exact proxy for individuals).

It is estimated that there are roughly
500,000-700,000 H-1B guestworkers currently living in the United States.

43 % of H-1B workers hold
computer-related jobs.

11 % of H-1B visas are for workers in
higher education.

56% of H-1B visas in computer occupations
were for positions classified as entry level or trainee in 2005.

Policy Implications

Although the programs are open to employers
in all sectors, H-1B and L-1 visas are most commonly used to fill information
technology jobs. This important job sector has experienced significant job
losses since the early part of the decade, with nearly 400,000 jobs evaporating
nationwide between 2001 and 2004, with only modest recovery in recent months.
In the Chicago metropolitan area, more than 10,000 IT jobs were lost, with only
2,000 recovered in the 2004-05 period. (See “Information Technology Labor
Markets: Rebounding, But Slowly,” by Snigdha Srivastava and Nik Theodore, Center
for Urban Economic Development, Chicago, Ill., June 2006.) Unemployment in this
sector has been somewhat higher than unemployment overall. Over the same time
period that so many jobs in IT disappeared, 2001-2005, more than 600,000 new
H-1B visas were approved, with an estimated 250,000 going to IT workers.

Under current conditions, it is hard to
justify continuing to operate a large-scale guestworker program that enables
U.S. employers to fill the relatively limited number of new jobs without some
incentive or outright requirement to cast down their bucket where they are, to
borrow the phrase of Booker T. Washington. Guestworker programs may work as a
short-term solution to real labor shortages. But they must be carefully crafted
so as not to foster dependency on the part of employers. The long-term solution
for critical industries has to be to enlarge the pipeline of home-grown workers,
or to nudge employers to adapt in other ways.

If employers are allowed to bypass
U.S workers in filling large numbers of jobs concentrated in certain sectors,
young people will start to self-select themselves out of those markets
altogether by choosing fields of study where the employment prospects seem
brighter. While I am not aware of any large scale studies or analyses of
enrollment data, certain universities have reported that enrollment of U.S.
students in science and technology majors has dropped noticeably in recent
years.

This phenomenon should be of real concern
to anyone troubled by the fact that women and minorities are already
significantly less numerous in science and technology occupations and university
teaching slots. According to the latest Bureau of Labor Statistics data, women
hold roughly 27% of the computer jobs, while blacks hold six to seven percent,
and Hispanics hold five percent. Representation is even worse at the major
research universities – a 2005 study found that women made up 11% of the
computer science faculty at the 50 largest U.S. research universities. There
were only 4 black computer science professors (less than 1%) and 17 Hispanic
computer science professors (about 1%). (See “A National Analysis of Diversity
in Science and Engineering Faculties at Research Universities,” by Donna J.
Nelson, University of Oklahoma, January, 2005.) While the presence of
guestworkers and international faculty may not be directly causing displacement
of underrepresented groups (and brings many benefits to the campus), it is
surely not helping this problem either.

I believe that we should continue to have
professional guestworker programs, though operated on a smaller scale and with
better oversight and regulation, because they are very useful to U.S. employers
and give them access to the best talent the world has to offer. The needed
reforms are not complicated:

Give the federal agencies the authority, tools and resources they need to
eliminate fraud, so that illegitimate applications are more easily rejected at
the stage of the employer petition, and unsuspecting applicants from overseas
are less likely to be swindled.

Provide the authority and resources for the Department of Labor to audit and
investigate employers and applications to ensure compliance with prevailing
wage and recruiting rules.

Forbid employers from denying opportunities to U.S. workers. Merely posting a
notice of an H-1B application at the job site, as per the current requirement,
is not sufficient to attract qualified U.S. workers.

The number of guestworkers each employer may sponsor should be limited,
particularly for entry-level and trainee positions.

The annual cap on issuances should not be increased without enacting oversight
and enforcement reforms and per-employer limits.

Guestworker provisions should not be included in international trade
agreements, so that Congress can continue to exercise its authority over these
matters with the interests of workers in mind.

States and localities should ensure that employers in their respective
jurisdictions are complying with state and local anti-discrimination laws.